Department for Business, Energy and Industrial Strategy

Energy Default Tariff Cap: Effective Competition Decision

Lord Callanan: My Rt hon Friend the Minister of State for Energy, Clean Growth and Climate Change (Greg Hands) has today made the following statement: The Domestic Gas and Electricity (Tariff Cap) Act 2018 enables the default tariff (price cap) on standard variable and default energy tariffs to be extended on an annual basis up to end of 2023 at the latest. These annual extensions are dependent on an assessment and statement that I make every year, by 31st October, on whether the conditions for effective competition are in place for domestic supply contracts. I am confirming today that the price cap mechanism will remain in place for 2022 as the conditions for effective competition are not yet in place for domestic supply contracts. As required by legislation, the independent energy regulator, Ofgem, has carried out an assessment into whether the conditions are in place for effective competition in domestic supply contracts this year. Ofgem have been transparent in how they made their assessment, and their report is clear and thorough. Ofgem assess that these conditions have not been met and recommend that the price cap mechanism should be extended. The level of the price cap is a separate matter for Ofgem to determine.